Reuters logo
CEE MARKETS-Forint retreats from 28-month high as central bank signals easing
August 24, 2017 / 9:28 AM / 2 months ago

CEE MARKETS-Forint retreats from 28-month high as central bank signals easing

    * Forint strongest since May 2015, retreats on cbank
comments
    * Hungarian central bank says ready for further monetary
easing
    * Hungarian easing would buck global trends, Czech rate hike
    * Crown firms ahead of likely strong Treasury bill auction

    By Sandor Peto
    BUDAPEST, Aug 24 (Reuters) - The forint retreated from a
28-month high against the euro on Thursday after Hungary's
central bank (NBH) signaled it stands ready to loosen monetary
conditions, bucking a global trend and a recent Czech central
bank (CNB) rate hike.
    The bank, replying to questions from Reuters, said a change
in the wording of its monthly statement released on Tuesday
meant it "will stand ready to ease monetary conditions further
using unconventional, targeted instruments".
    The change was that the bank dropped its previous
statement's conditional clause: "if inflation remains
persistently below the target".
    The forint, after hitting a 28-month high against
the euro in early trade at 301.72, reversed course after the
comments to trade down 0.1 percent at 302.95 by 0832 GMT.
    "Everybody in the market had expected the NBH comments like
Messiah," one Budapest-based fixed income trader said. "302 was
a too sensitive level to them ... they found the forint's rise
too fast. 
    "But I do not think that they will be able to stop the rise:
even if it does not reach 300, it could soon firm to around
301.50," the dealer added. 
    The NBH noted in its statement that central Europe's robust
economic performance was lifting its currencies.
    In Thursday's comments it said the inflation-targeting
regimes of the region's central banks were different in their
target levels and flexibility.
    That was a reference to the CNB, which has the region's
lowest inflation target at 2 percent, and lifted its record low
main interest rate in early August in the first such move in the
European Union since 2012.
    While the NBH, the region's most dovish central bank,
struggles with a firming currency, the rate hike has failed to
lift the crown from levels around 26.1 per euro.
    On Thursday it firmed 0.1 percent to 26.1, ahead of a
Treasury bill auction which is expected to trigger strong demand
as the government has said that it would not auction bills next
month despite huge expiries in the August-September period.
    The crown is the region's top-performing currency this year.
It has firmed 3.5 percent since April when the CNB removed a cap
which had kept it weaker than 27 for several years.
    Before that move, foreign investors bought huge amounts of
crowns, making the currency overbought. That hinders further
gains and the bill expiries may put pressure on the currency.
     "The CNB hiked in August, but its forecast does not point
to another hike in a year, so that might have been a
disappointment for some," Viktor Zeisel, analyst at Komercni
Banka, said.
               CEE MARKETS  SNAPSH   AT  1032 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.094  26.132   +0.15   3.50%
                                 0       0       %  
 Hungary                    302.95  302.67  -0.09%   1.94%
 forint                         00      00          
 Polish zloty               4.2797  4.2832   +0.08   2.90%
                                                 %  
 Romanian leu               4.5850  4.5869   +0.04  -1.09%
                                                 %  
 Croatian                   7.4125  7.4075  -0.07%   1.92%
 kuna                                               
 Serbian                    119.08  119.35   +0.23   3.59%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1031.1  1031.3  -0.02%   +11.8
                                 0       3              8%
 Budapest                   37791.  37753.   +0.10   +18.0
                                65      22       %      9%
 Warsaw                     2412.6  2391.0   +0.90   +23.8
                                 9       6       %      6%
 Bucharest                  8345.3  8352.0  -0.08%   +17.7
                                 5       9              9%
 Ljubljana                  823.41  821.30   +0.26   +14.7
                                                 %      5%
 Zagreb                     1899.0  1899.7  -0.04%  -4.80%
                                 9       6          
 Belgrade                   721.58  720.74   +0.12   +0.59
                                                 %       %
 Sofia                      725.83  723.02   +0.39   +23.7
                                                 %      7%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                   -0.016    0.01   +071b   +1bps
                                                ps  
   5-year                    0.073   0.043   +038b   +5bps
                                                ps  
   10-year                   0.903  -0.024   +052b   -3bps
                                                ps  
 Poland                                                   
   2-year                    1.753  -0.007   +248b   -1bps
                                                ps  
   5-year                    2.633   0.004   +294b   +1bps
                                                ps  
   10-year                   3.317   0.005   +294b   +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR     0.6     0.7     0.8       0
               IBOR=>                               
 Hungary               <BU     0.2    0.24     0.3    0.15
               BOR=>                                
 Poland                <WI    1.78     1.8    1.85    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Additional reporting by Robert Muller in Prague; Editing by
David Holmes)
  
 
 

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below